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Woosnam plc invests in a new piece of equipment, the Tiger 2000, costing 40,000 on 1 January 2007. It intends to operate the equipment for
Woosnam plc invests in a new piece of equipment, the Tiger 2000, costing 40,000 on 1 January 2007. It intends to operate the equipment for four years when the scrap value will be zero. Expected net cash flows from the project are 10,000 in the first year and 20,000 for each of the next three years. The discount rate is 15 per cent and the rate of Corporation Tax is 30 per cent.
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